Yulia Tymoshenko … a Ukrainian court has turned down an appeal by the jailed former prime minister against her conviction for abuse of office. Photograph: Sergei Supinsky/AFP/Getty Images

The rejection of Yulia Tymoshenko's appeal against a conviction for abuse of office by a three-judge panel of the Ukrainian high specialised court for civil and criminal cases is only likely to further entrench the domestic and international divisions that surround the case. A vice prime minister, Sergei Tigipko, said the verdict confirmed Tymoshenko's criminal guilt while the EU reaffirmed its opposition to what it called politically motivated selective justice.

The twice former prime minister who was the linchpin of the Orange revolution in 2004 was detained on remand in August 2011 part way through a trial for abuse of office centring on the signing of a gas contract between the country's state-owned gas company, Naftogaz, and Russia's Gazprom in January 2009. Tymoshenko was found guilty in October 2011 and sentenced to seven years in prison, disqualified from participation in future elections and ordered to pay $190m compensation to the gas company. During her imprisonment Tymoshenko has claimed to have been mistreated and is currently held in a hospital in Kharkiv where she is receiving medical treatment for back problems.

Tymoshenko's defence claimed the case amounted to political persecution by Ukraine's president, Viktor Yanukovich, and his ruling Party of Regions, motivated by a desire to exclude its most potent opponent from the political landscape. If this was indeed the aim it has failed miserably as the case has become a cause celebre inside and outside the country. The EU and its member states have been vocal in their criticism. The EU has placed on hold the ratification, after five years of negotiations, of an association agreement and a free trade agreement with Ukraine. Yanukovych has warned the west not to interfere in its domestic affairs, and division within the EU over how far it dare distance itself from Ukraine given Russia's strategic interest means it is unlikely to follow up its threats with sanctions.

Now two courts have found that while she was prime minister, Tymoshenko ordered Naftogaz to sign a contract with Gazprom without having the legal authority of the cabinet of ministers. They also discovered that Tymoshenko illegally threatened to replace the company's director if he failed to sign the contract.

The case centres on a puzzling "gas war" between Ukraine and Russia in January 2009 which halted the flow of gas to Ukraine and the EU for three weeks in the middle of winter. Tymoshenko, then prime minister, appeared to have entered into a new agreement with Russia only to renege on signing an acceptable fixed-price contract by the year-end at the last minute. After a three-week stand-off, Tymoshenko, presumably under enormous pressure from the EU, ordered the signing of a less advantageous 10-year variable-price contract which imposed punitive conditions on the Ukrainian side.

It has been suggested that Tymoshenko's generous approach towards the Russians in negotiations may have been due to a conflict of interest stemming from the allegation that she owes $400m to Russia from previous private business dealings in the 1990s when she was a gas trader. However, this interpretation hardly tallies with the west's heightened sensitivity to her conviction. It is at least plausible that Tymoshenko was a pawn in a western geopolitical gambit designed to discredit Russia as an energy supplier, to sour relations between Ukraine and Russia and to re-align Ukrainian domestic politics.

In one sense the west is quite correct that the case against Tymoshenko is political but this is more to do with the way her defence and supporters have appealed to the court of public opinion than vindictive political persecution by the authorities. Tymoshenko has initiated a case in the European court of human rights, but ultimately her fate will depend on the country's electoral politics.

The case has reunited and reinvigorated the opposition, which will contest the parliamentary elections at the end of October as one list and is currently narrowly leading in opinion polls. Meanwhile, despite a late pre-election spending splurge, the ruling Party of Regions' popularity has dipped having followed an IMF austerity programme. Equally, the Russian government has so far refused to renegotiate the gas contract, which the Ukrainian government claims cost it $6bn in 2011, thereby damaging an already weak economy.

Should Tymoshenko's exclusion from parliamentary elections prompt the west to declare them as not free and fair then the next presidential election, scheduled for March 2015, will, as in 2004, be cast in stark terms of democrats verses authoritarians and will be a case of winner takes all. Whether Tymoshenko will once again be a participant or a most interested observer remains to be seen.